Business Records For Making Tax Digital For VAT

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 All businesses that have a taxable turnover of more than PS85,000 must submit their VAT returns to the Making Tax Digital (MTD), service, starting April 2022. This means that certain business records will need to be updated in order to make Making Tax Digital easier. This could mean that your bookkeeping procedures may need to be changed.

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Making VAT Digital: Overview

MTD will revolutionize your accounting and make it possible to store digital records. HMRC's initiative goes beyond introducing new rules. This initiative aims to digitally transform the tax process and reduce errors caused by manual processes (such incorrect keying in data).

All businesses must use compatible software packages to prepare their VAT returns under the new rules.

Software must be able:

  1. Make certain to keep and maintain digital records as per the set regulations

  2. Considering to utilize the digital records to prepare VAT returns

  3. Considering to utilize a digital link to connect with HMRC

You can connect with the VAT registration services London experts and get all the assistance related to it.

Digital Record: Synopsis

A digital record, in the context of MTD is a digital version of paper records. Information can be easily transferred between software programs, products, or applications.

Companies that fall within the Making Tax Digital for VAT scope must create digital records for every invoice (supply), time and date, as well as the VAT rate and net value.

MTD doesn't completely rely on paper. Some records, like import VAT certificates (C79), are still available in hardcopy. MTD has one difference: you will need to transfer your VAT accounting information into your accounting software before you submit the VAT return.

Storing Digital Records: Step By Step

HMRC has confirmed that spreadsheets can be used by businesses to keep records. To complete your VAT return, a VAT-filer software must be able retrieve data from the spreadsheet. This is the digital connection.

Your accounting software must be ready to use VAT, as mentioned previously. Cloud accounting software should be MTD-ready for VAT. However, most cloud software providers will update it.

You will need to upgrade any software that is outdated or not in use to prepare for the full VAT period. Our Oxford bookkeepers can assist you in this transition. Book a complimentary session with us to learn more about how we can help you. Although it may seem overwhelming, you can make this process much easier with the help of experienced and qualified bookkeepers.

Business Records That Needs To Be Stored Digitally

  1. You can find details about the VAT accounting schemes you use

  2. Your business name, VAT registration number, and address

  3. Refunds can be adjusted

  4. You pay VAT for goods and services that you receive and supply

  5. All goods and services that you purchase or sell 

  6. Source of VAT transactions

  7. Reverse Charge transactions

  8. You have to compensate VAT on the services and goods that you supply

All About Storing Digital Business Records

As we have already mentioned, storing business redords digitally in Making Tax Digital helps to prevent or minimize fraud and mistakes. Failure to comply with the new rules could result in penalties for late taxes payments or submission.

You must plan carefully to ensure that everything is in order from the beginning and that you do not incur penalties.

Here's how it works.

Register a new account using compatible accounting software, and link it to your HMRC VAT Account. This will allow the software to update HMRC VAT information. Our checklist to help you prepare for MTD contains more information.

You need additional advice or help regarding business records and Making Tax Digital. Make an appointment to meet with one of the accounting services London experts. If you are looking for one, then you can connect with the experts at MintAccountax and get all the queries resolved.

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